One of the most valuable assets many people own is real estate. Protecting your real estate is an important part of estate planning.
As a default rule, real estate is a probate asset. This means that after the property owner dies, the real estate must pass through the probate court process before the family can sell it or change the names on the deed.
With thoughtful estate planning, your real estate can pass to your loved ones smoothly without probate court involvement. There are several options:
Survivorship Deed
A survivorship deed is a specific type of deed in which two people jointly own property. After one person dies, ownership of the property passes to the second person. The property does not go the family or heirs of the first owner, but rather the title passes completely to the second owner.
Survivorship deeds are a good estate planning tool for married couples. Both spouses own the property jointly while they are alive. They have the right to use and enjoy the property and share the responsibility for the property’s maintenance and taxes.
Survivorship deeds are common in property purchased in recent years. For properties purchased ten or twenty or more years ago, survivorship deeds are uncommon. An estate planning attorney can review your deed and, if it is not a survivorship deed, help you make the necessary changes.
Transfer on Death Designation Affidavit (TODDA)
The owner of a property can complete a transfer on death designation affidavit (TODDA) to name someone who will inherit the property without going through probate court. The TODDA is not a deed, but much like a deed, an attorney will prepare the TODDA for you to sign, and an attorney will record the TODDA in the county where the property is located.
A TODDA is a good estate planning tool for single people. The current owner is the only owner of the property while they are alive, so they do not risk the property if the beneficiary runs into financial or legal trouble while the original owner is alive. After the owner dies, the beneficiary can work with a probate attorney to prepare a simple form memorializing the transfer into the beneficiary’s name. This is much simpler, faster, and less expensive than leaving the property to the same beneficiary in a will and having the property therefore pass through probate court.
Transfer Real Estate into Trust
A trust can also keep real estate out of probate. After creating a trust, your attorney can help you transfer the property out of your name individually and into the trust.
A common type of trust for avoiding probate is a revocable living trust. The grantor (the person making the trust) can transfer many of their assets into the trust. Often the grantor is the original trustee and manages the trust assets while they are alive. The trust includes language about who will be the successor trustee after the grantor’s death and how the successor trustee should distribute the grantor’s assets. The trust might, for example, direct the trustee to sell the property and split the proceeds between the grantor’s children, or it could instruct the trustee to allow the grantor’s family to live in the property rent-free for a certain number of years. Trusts are very customizable and an estate planning attorney can draft a trust that fits your specific needs.
If you are considering your options for estate planning for real estate, consult with a local attorney about which option is best for you. For help with estate planning and probate in Northeast Ohio, Lewis Legal, LLC is here to help.